Highlights
Coverage was mixed for Monday's T-bill auctions, at a soft 2.89 for the 3-month and a solid 3.34 for the 6-month. Preference for the longer maturity by end investors was evident from the bidder allocation breakdown, with non-dealers taking down only 28 percent of the $42 billion 3-month offering, the smallest share since May 1, but 60 percent of the $36 billion offering in the 6-month, their largest share since August 28. The high discount rates were also mixed, up by a half of a basis point to 1.050 percent for the 3-month and down 1 basis point to 1.07 percent for the 6-month.

Definition
Treasury bills are sold at public auctions every week. The 3-month bill is also known as the 13-week bill. Competitive bids at these auctions determine the interest rate paid on each issue. A group of securities dealers, known as primary dealers, are authorized and obligated to submit competitive tenders at Treasury auctions. Dealers can hold the bills, resell the bills to their clients or trade them with other securities firms. Typically, the New York Fed approves about 20 securities firms to be primary dealers but that number dropped sharply during the 2008 financial crisis as some were merged into other firms or went bankrupt. The Fed has been rebuilding that number regularly and the latest list can be found here. Since these are public auctions, the Treasury must announce the size, date and time of the auction every week. Three-month bills are announced on Thursday for auction the following Monday and are issued (settled) on Thursday. If a Monday is a banking holiday, the bills are auctioned on Tuesday. (Department of the Treasury)
Why Investors Care

Data Source: Haver Analytics

The 3-month bill rate is
usually
similar to the federal funds
rate
target; often when bond
investors
expect a rising rate
environment,
it is higher than the funds
rate,
but when investors expect rates
to decline, it will be lower
than
the funds rate target. The
3-month bill rate depicted in
this chart represents the high
discount rate from the
Treasury's
weekly auction on Mondays. It
only represents one moment in
time, and is not an average of
daily numbers. The date on the
chart is associated with the
issue (or settlement) date of
the
Treasury security, which is on
the Thursday of the week that
the
security is auctioned. Our grid
tables show the auction date of
the security, which is usually
on
Mondays.Data Source: Haver Analytics